TIDMNSA
RNS Number : 8886R
Nimrod Sea Assets Limited
14 December 2016
NIMROD SEA ASSETS LIMITED (the "Company")
Half-yearly Financial Report
In accordance with the FCA's Disclosure Guidance and
Transparency Rules, the Board of directors of the Company announces
the Company's results for the period from 1 April to 30 September,
2016. The full text of the half-yearly financial report is included
below.
The Company will make a further announcement once the
half-yearly financial report has been uploaded to the Company's
website and submitted to the FCA's National Storage Mechanism.
For further information, please contact:
For administrative and company information:
JTC (Guernsey) Limited
+44 (0) 1481 702 400
For shareholder information:
Nimrod Capital LLP
Richard Bolchover
Marc Gordon
+44 (0) 20 7382 4565
14 December, 2016
OF ANNOUNCEMENT
E&OE -- in transmission
Nimrod Sea Assets Limited
Half-yearly
Financial Report
From 1 April to
30 September 2016 (Unaudited)
NIMROD SEA ASSETS LIMITED (the "Company")
CONTENTS
Page
1 Summary Information
2 Company Overview
4 Chairman's Statement
5 Executive Directors' Investment Report
9 Directors' Information
11 Interim Management Report
12 Unaudited Financial Statements
16 Notes to the Financial Statements
35 Key Advisers and Contact Information
Defined terms used in this Half-yearly Financial Report shall
have the same meaning as ascribed to them in the Company's
Prospectus dated 12 March 2014.
NIMROD SEA ASSETS LIMITED (the "Company")
SUMMARY INFORMATION
Listing Specialist Fund Segment (formerly Specialist
Fund
Market) of the London Stock Exchange's
Main Market
----------------------------- ---------------------------------------------
Ticker NSA
----------------------------- ---------------------------------------------
Market Capitalisation USD 6.52 million (as at 30 September,
2016)
----------------------------- ---------------------------------------------
Currency USD
----------------------------- ---------------------------------------------
Launch Date/Price 24 March, 2014 / USD 1.00 per Share
----------------------------- ---------------------------------------------
Incorporation Guernsey
----------------------------- ---------------------------------------------
Consultancy Service Provider Auld Partners Ltd (appointed 3 October,
2016)
Stamford Maritime Limited (resigned
30 September,
2016)
----------------------------- ---------------------------------------------
Corporate and Shareholder Nimrod Capital LLP
Adviser
----------------------------- ---------------------------------------------
Administrator and Secretary JTC (Guernsey) Limited
----------------------------- ---------------------------------------------
Auditor Deloitte LLP
----------------------------- ---------------------------------------------
Market Makers Winterflood Securities Limited
Jefferies International Limited
----------------------------- ---------------------------------------------
SEDOL, ISIN BK0SC85, GG00BK0SC854
----------------------------- ---------------------------------------------
Year End 31 March
----------------------------- ---------------------------------------------
Stocks and Shares ISA Eligible
----------------------------- ---------------------------------------------
Website www.nimrodseaassets.com
----------------------------- ---------------------------------------------
NIMROD SEA ASSETS LIMITED (the "Company")
COMPANY OVERVIEW
Nimrod Sea Assets Limited
Nimrod Sea Assets Limited (LSE: NSA) ("NSA" or the "Company") is
a non-cellular Guernsey company limited by shares and incorporated
on 8 October 2012. The ordinary shares of the Company were admitted
to trading on the Specialist Fund Segment ("SFS") (formerly the
Specialist Fund Market) of the London Stock Exchange's Main Market
("LSE") on 24 March 2014.
The Company's total issued share capital currently consists of
130,000,000 ordinary shares of no par value (the "Shares") which
were admitted to trading at an issue price of USD 1.00 per
Share.
Investment Objective and Policy
The Company's investment objective was to obtain income return
and capital appreciation for its shareholders by participating in
vehicles which acquire, charter and sell Marine Assets associated
with the offshore oil and gas industry.
To pursue its investment objective, the Company obtained
exposure to Marine Assets by acquiring interests in special purpose
holding companies ("Marine Asset Companies").
The majority of the Marine Assets to which the Company has
exposure at any time are those that are needed for the inspection,
repair, maintenance and operation of installed infrastructure and
production equipment for use in the offshore oil and gas
industry.
The Board has conducted extensive reviews of the existing
portfolio, investment policy and the investment process and future
opportunities. Market conditions have remained uncertain and the
Board considers that, unless market conditions improve
significantly, it is unlikely to make any further new
investments.
Distribution Policy
Following the significant deterioration of the oil market during
2015 and 2016, the Company has previously made announcements
regarding the payment of distributions (RNS numbers: 7405Q, 5576R,
9410A, 4760K and 4223T), as well as the strategy to be adopted
regarding uninvested capital (RNS number: 9410A). The Board had
previously announced that it anticipated declaring a quarterly
dividend of 2 cents per Share from the end of June 2015 until March
2016. This was funded by income received net of expenditure and
added to from the Company's capital resources. The dividends of 30
June, 2015, 30 September, 2015, 31 December, 2015 and 31 March,
2016 have been distributed to shareholders.
As a result of the poor market conditions and on the basis the
Company is unlikely to make any further new investments; on 13
April, 2016 the Company announced its intention to return
uninvested capital at 20 cents per Share which was paid to
shareholders on 29 April, 2016 (RNS number: 1297V).
Investments to date
As at 30 September, 2016 the Company held investments in the
following Marine Asset Companies: Bukit Timah Offshore DIS,
Norseman Offshore IS, Volstad Maritime II DIS, Altus Subsea IS,
Aberdeen DIS and Jane Offshore Limited. However, only three have
been given any value in this Half-yearly Financial Report.
Realisation Resolution
Although the Company does not have a fixed life, the Company's
Articles of Incorporation (the "Articles") require that, at the
first annual general meeting held following 24 March 2019, being
the fifth anniversary of admission to trading on the SFS, the
directors propose an ordinary resolution that the Company proceed
to an orderly wind-up (the "Realisation Resolution").
If the Realisation Resolution is passed, the Directors will, as
soon as reasonably practicable thereafter, bring forward specific
proposals for the orderly winding up of the Company. The intention
of the directors is that the proposals will seek to return capital
to investors within two years, and in any event no later than three
years, of the Realisation Resolution being passed (subject to
shareholders' approval by ordinary resolution of an alternative
period for return at the time of the Realisation Resolution being
passed).
In the event that the Realisation Resolution is not passed, the
directors will consider alternatives for the Company and shall
propose such alternatives at a general meeting of the Company,
which may include re-investment of capital with new Marine Asset
Companies or, if preferable, seeking to petition existing Marine
Asset Companies to renew the Charter Party Agreements on their
underlying Marine Assets or seek a subsequent Charter
Counterparty.
NIMROD SEA ASSETS LIMITED (the "Company")
CHAIRMAN'S STATEMENT
I would like to present the Half-yearly Financial Report of the
Company for the financial period from 1 April to 30 September, 2016
(the "Period"). On behalf of the Board of directors, I take this
opportunity to thank all shareholders for their support during this
very challenging time.
As shareholders will be aware, the environment in which the
Company has operated has continued to be difficult and our assets
have been written down further, as you will see below.
The Company, however, faced other challenges during the Period,
which led to the Board concluding that the Company needed to be
advised by new executive directors.
Following support from shareholders for this change, the
executive directors resigned at the end of September and the
services of Stamford Maritime Limited were terminated with
immediate effect. The Company has appointed Auld Partners Ltd
("Auld") as the new consultant to the Company and its partners,
Robin Das and Frank Pedder, have been appointed to the Board as
executive directors. Auld has significant experience in the
maritime field.
The new executive directors, together with the non-executive
directors and the Company's Shareholder Advisor, Nimrod Capital
LLP, are assessing the portfolio and reviewing the options open to
the Company.
As you will be aware, the Company only invested 54% of the
Company's investable funds available and the vast majority of these
funds were invested in the first full year of the Company's listing
from March 2014 to April 2015.
As a result of the problems facing the sector, the Company
reacted early on and made various announcements in the early part
of the year. These included the decision to effectively halt any
further deals and new transactions, to pay four quarterly dividends
of 2 cents per share from June 2015 to March 2016, most of which
came out of capital, and to return unrequired, uninvested cash of
some 20 cents per share. Taking these dividend payments and the
return of capital, the latter of which shareholders received via a
B share redemption in April 2016, investors have received back
nearly 30% of their original investment.
As at 30 September, 2016 the net asset value per share was 20.24
cents. The Company still has six investments in Marine Asset
Companies comprising in total eight vessels. However, only three
have been given any value in this Half-yearly Financial Report.
Full details of all of these investments held by the Company can be
found in the Executive Directors' Investment Report on pages 5 to
8.
As we have stated before, the Company remains focused on
maximising the return to shareholders from its existing assets and
continuing to ensure it has the necessary expertise to do this, as
well as reviewing the strategic options available. This constitutes
the main focus of our activities.
Jeffrey Vidamour
14 December 2016
NIMROD SEA ASSETS LIMITED (the "Company")
EXECUTIVE DIRECTORS' INVESTMENT REPORT
Market and Investment Portfolio Update
The offshore industry remains extremely challenging. With supply
of offshore vessels significantly in excess of demand, many vessels
are laid up and short term market rates are low - often at, or
below, operating costs.
Supply of offshore vessels is expected to peak during 2017, as
most of the order book will then have been delivered.
PSV supply/demand balance (# PSVs) AHTS supply/demand balance (#
AHTSs)
On the demand side, analysts expect E&P spending to decline
by 25-30% in 2016 and to be flat-to-down 12% in 2017 (Source:
Pareto, DNB Markets and Fearnleys), driven by the oil price.
Analysts believe that E&P companies require oil to trade at USD
50-55 per barrel to balance operating cash flow with capital
expenditure and dividends in 2017.
NIMROD SEA ASSETS LIMITED (the "Company")
As a result of the supply-demand situation, no improvement in
the offshore market is expected in the near term and there is a
clear differentiation between projects with fixed, longer term
employment (to a creditworthy party) and those which are exposed to
the current market.
Many offshore companies and projects are highly leveraged and
are in restructuring discussions with their lenders and charter
vessel providers. Lender and charter vessel owner behaviour has
been supportive in cases where balance sheets are stronger and
where there is greater contracted/visible cashflow with credible
counterparties. As may be expected, lenders are generally blocking
dividends to shareholders and requesting shareholder contributions
where they can.
Since being appointed in October 2016, the new executive
directors have undertaken an assessment of, and continue to review,
the Company's investment portfolio, with the main focus being on
the three investments to which we still attribute material positive
equity value. This involves: 1) assessing the situation of the one
asset which is effectively exposed to the short term market (Altus
Subsea AS), and 2) seeking to create as much certainty as possible
regarding the cash flows of the two remaining assets where the
charterers continue to perform (Jane Offshore Ltd and Volstad
Maritime DIS II).
Prior to the appointment of the new executive directors, the
value of the Company's holding in Bukit Timah DIS was written down
to zero (per press release dated 28 July, 2016). The current value
of the Company's holding in Jane Offshore Ltd has improved, based
on a stronger financial position than expected of charterer EDT.
The value of the holdings in Altus Subsea IS and Volstad Maritime
DIS II have been revised lower, mainly to reflect lower broker
valuations of the vessels given the current market situation.
Over the past few months, the Company has received indicative
proposals from third parties suggesting various strategic and
restructuring options. The executive directors intend to continue
considering these options for the future of the Company, and any
others that may be put forth, including an orderly managed
wind-down, while recognising that exiting existing investments in
the near term is challenging, with a dearth of potential
buyers/investors given the short-term outlook for the offshore
industry.
Project Investment Summary
Marine Asset Percentage Purchase Percentage Value as Percentage
of of at 30 of
------------------- ----------- ----------- --------------- ---------- -----------
Company ownership Cost investable Sep 2016 investable
funds funds
------------------- ----------- ----------- --------------- ---------- -----------
(USD) as at Purchase (USD) as at 30
Sep
------------------- ----------- ----------- --------------- ---------- -----------
2016
------------------- ----------- ----------- --------------- ---------- -----------
Bukit Timah
Offshore
DIS 26.0% 8,585,125 7.1% nil 0.0%
------------------- ----------- ----------- --------------- ---------- -----------
Norseman Offshore
IS 43.0% 11,046,500 9.1% nil 0.0%
------------------- ----------- ----------- --------------- ---------- -----------
Volstad Maritime
DIS II 20.5% 7,261,000 6.0% 3,197,061 2.6%
------------------- ----------- ----------- --------------- ---------- -----------
Altus Subsea
IS 51.0% 9,639,000 8.0% 4,075,249 3.4%
------------------- ----------- ----------- --------------- ---------- -----------
DSV Alliance
DIS 99.5% 12,750,000 10.6% nil 0.0%
------------------- ----------- ----------- --------------- ---------- -----------
Aberdeen Offshore
DIS 75.0% 12,750,000 10.6% nil 0.0%
------------------- ----------- ----------- --------------- ---------- -----------
Jane Offshore
Ltd 50.0% 8,022,500 6.6% 4,629,832 3.8%
------------------- ----------- ----------- --------------- ---------- -----------
Investment Performance
Aberdeen Offshore AS
The FS Cygnus is currently on charter to Enquest UK Ltd, until
January, 2017 at a rate which covers operating expenses, however is
insufficient to fully cover debt service. Negotiations are
currently ongoing for an extension of the charter, but at a lower
rate. Aberdeen Offshore AS has reached agreement with the senior
debt provider to delay debt service until January, 2017. Given the
cashflow situation, the defaults under the loan (temporarily waived
by the lender) and the high debt level versus the estimated market
value of the vessel, the equity should be considered lost and it
may not be possible to safeguard any possible future recovery for
the Company.
Norseman AS
Viking Supply AS (charterer of the Odin Viking) stopped paying
charter hire in February, 2016 and negotiations between the parties
since then have not been successful. DVB as lender to Norseman AS
has made calls for the uncalled capital to be paid in, something
the majority of the shareholders have resisted. As a result, DVB
have successfully petitioned the Norwegian courts for the
bankruptcy of Norseman AS. DVB has also won the court's approval of
a forced sale of the vessel and other rights such as payment of the
uncalled capital. We are currently evaluating our options with
respect to the uncalled capital.
Altus Subsea AS
This project has encountered significant payment issues, largely
because Marine Engineering and Diving Services FZE ("MEDS"), the
charterer, has had insufficient work for the Altus Invictus. Since
the contract in April, 2016 in Qatar, Altus Invictus has been
unemployed apart from a few weeks recently when the vessel has been
on a contract in Iran. MEDS remains in financial difficulties with
an uncertain forward order book for its fleet of 3 vessels. The
Altus Subsea board is currently working with the business manager
in order to assess the Company's options.
Bukit Timah DIS
As reported by NSA on 28 July, 2016, a winding-up application
was filed in Singapore in respect of Swiber Holdings Limited on 27
July, 2016, which has subsequently changed to the company being put
into judicial management. As a result, Swiber is no longer
performing under the charters, which have been terminated. The
Bukit Timah Offshore board is co-operating with the financing banks
who intend to take control of the vessels and auction them. The
estimated values that can be achieved from a forced sale of the
vessels are unlikely to cover the outstanding debt, so there is no
equity value remaining.
Jane Offshore Ltd
In common with the overall OSV fleet the EDT Jane has had poor,
but improving, utilisation rates since June, 2015. However, EDT
Offshore Ltd ("EDT") continues to make payment in full under the
charter. Jane Offshore Ltd is not in compliance with all its loan
covenants, but the lender has provided a waiver until year-end 2016
and discussions are taking place regarding an extension. The lender
has required Jane Offshore Limited to suspend dividends for the
time being. The Company is of the opinion that distributions may
resume in 2018. EDT has successfully taken steps to restructure its
obligations and raise cash through asset sales, as well as actively
winning new contracts.
Volstad Maritime DIS II
The seismic market continues to be extremely weak, but the
charterer of this investment continues to perform as planned. The
Oceanic Endeavour remains on charter to CGG Eidesvik and has worked
consistently throughout the year. CGG, the parent company of the
charterer, is one of the larger players in the segment and is
proactively restructuring its business to cope with the difficult
market. However, CGG is rated CCC+. The vessel's value has recently
been revised downwards, but the company remains in compliance with
the loan to value covenant on its debt. The vessel is one of the
most capable in its class with up to date technology installed and
we believe it is highly regarded by the charterer. However, given
the current market conditions we believe it is unlikely the charter
extension options will be exercised at the agreed rates and it is
likely that a different arrangement will need to be negotiated with
CGG. We understand that, in light of this uncertainty, the lender
to this project will not permit the payment of dividends in the
short to medium term.
Robin Das Frank Pedder
Executive Director Executive Director
14 December 2016
NIMROD SEA ASSETS LIMITED (the "Company")
DIRECTORS' INFORMATION
Jeffrey (Jeff) Vidamour (Age 67)
Chairman of the Board and the Investment Committee
Jeff is the Chairman and a non-executive director of MEIF II
Channel Islands Transport Limited which owns the Condor Group. He
retired as an executive director of the Condor Group on 31
December, 2007 after 40 years' service in the marine industry.
Whilst at the Condor Group he was responsible for vessel chartering
requirements and as Project Director oversaw the acquisition,
building and commissioning of three purpose built Ro-Ro/Ro-Pax
(roll-on/roll-off freight and passenger) vessels for the Condor
Group's own Channel Islands service.
He is Guernsey resident and is chairman of James 750 Limited, a
subsidiary of the States of Guernsey, which owns and operates two
3000 tonne coastal oil tankers. Jeff is a non-executive director of
Guernsey Stevedores Limited.
Peter Atkinson (Age 62)
Non-executive Director and Chairman of the Audit Committee
Peter is a non-executive director and an Advocate of the Royal
Court of Guernsey and an English Solicitor. Admitted to the Bar in
1980, he was senior partner of Collas Day Advocates (now Collas
Crill) for 14 years. He is presently a Consultant with AFR
Advocates. He specialises in corporate and fiduciary work and has
been and continues to act as a non-executive director of private
companies and companies within the financial services sector. Past
and current directorships include companies listed on the London
Stock Exchange and Channel Islands Securities Exchange. He is a
former chairman of the Guernsey Bar and resides in Guernsey.
Norbert Bannon (Age 67)
Non-executive Director and Chairman of the Remuneration
Committee
Norbert Bannon is chairman of a large UK DB pension fund, a
major Irish DC pension scheme and is a Director of and advisor to a
number of other financial companies. He is Chairman of Doric Nimrod
Air Two Limited and Chairman of the Audit Committee of Doric Nimrod
Air Three Limited. He has extensive experience in international
finance having been CEO of banks in Singapore and New York. He was
CEO of Ireland's largest venture capital company and was Finance
Director and Chief Risk Officer at the leading investment bank in
Ireland. He has worked as a consultant on risk issues
internationally.
He earned a degree in economics from Queen's University, studied
at Stanford Graduate School of Business and is a Chartered
Accountant.
Robin Das (Age 44)
Executive Director (appointment effective from 6 October
2016)
Robin is an executive director of the Company. Robin founded
Auld Partners Ltd in 2013. From 2011 to 2012 Robin was Managing
Director (partner) of Navigos Capital Management, an asset
management firm established to focus on the shipping sector. Until
October 2011, Robin was Global Head of Shipping at HSH Nordbank -
the world's largest shipping lender at the time. Before joining HSH
in 2005, he was Head of Shipping at WestLB and prior to this Robin
was joint Head of European Shipping at J.P. Morgan. Robin has
worked in shipping finance and shipping investment banking since
1995.
Frank Pedder (Age 53)
Executive Director (appointment effective from 6 October
2016)
Frank is an executive director of the Company. Frank joined Auld
Partners Ltd in 2014. From 2006 to 2013 Frank was with DNB as Head
of Corporate Finance and Senior Advisor, London, and prior to this
spent 4 years with DVB Bank as Partner and senior member of the
M&A/Advisory team. Frank started his career with Manufacturers
Hanover (J.P. Morgan) in 1988 as a credit analyst and spent 13
years with J.P. Morgan in Oslo, London and New York, most recently
as Head of Shipping Americas in New York.
Jeremy Punnett (Age 43)
Executive Director (resigned effective from 30 September
2016)
Cyril Green (Age 67)
Executive Director (resigned effective from 30 September
2016)
NIMROD SEA ASSETS LIMITED (the "Company")
INTERIM MANAGEMENT REPORT
from 1 April to 30 September, 2016 (the "Period")
A description of the important events that have occurred during
the Period and their impact on the condensed set of financial
statements is included in the Executive Directors' Investment
Report on pages 5 to 8. A description of the principal risks and
uncertainties facing the Company is given in the Executive
Directors' Investment Report and notes 7, 12 and 14. Details of all
related party transactions and changes in the related parties are
given in the Chairman's Statement and note 15 to the financial
statements. Other than the information set out in the Chairman's
Statement, the Executive Directors' Investment Report and notes 7
and 15, the Board is not aware of any events or changes in the
related parties transactions during Period, which had or could have
had a material impact on the financial position of the Company.
The directors jointly and severally confirm that, to the best of
their knowledge:
(a) The financial statements, prepared in accordance with
International Financial Reporting Standards, give a true and fair
view of the assets, liabilities, financial position and profit or
loss of the Company; and
(b) This Interim Management Report includes or incorporates by
reference:
(i) an indication of important events that have occurred during
the first six months of the financial year and their impact on the
financial statements;
(ii) a description of the principal risks and uncertainties for
the remaining six months of the financial year;
(iii) confirmation that there were no related party transactions
in the first six months of the current financial year that have
materially affected the financial position or the performance of
the Company during that period; and
(iv) changes in the related party transactions described in the
last annual financial report that could have a material effect on
the financial position or performance of the Company in the first
six months of the current financial year.
Signed on behalf of the Board of directors on 14 December
2016
Peter Atkinson
Chairman Audit Committee
NIMROD SEA ASSETS LIMITED (the "Company")
STATEMENT OF COMPREHENSIVE INCOME
for the period ended 30 September 2016
Period Ended Period Ended
Notes 30 Sep 2016 30 Sep 2015
USD USD
Operating income
Net movement in unrealised
losses on
financial
assets at fair value through
profit or loss 7 (6,608,081) (17,337,082)
Distributions received from
investments 507,400 1,103,474
Bank interest received 18,685 53,930
------------- -------------
(6,081,996) (16,179,678)
Operating expenses 4 (1,663,444) (2,990,871)
------------- -------------
Net loss for the period before
finance costs
and foreign exchange gain
/ (loss) (7,745,440) (19,170,549)
------------- -------------
Unrealised foreign exchange
gain / (loss) 15,548 (3,067)
------------- -------------
Net loss for the period attributable
to
shareholders (7,760,988) (19,173,616)
------------- -------------
Other comprehensive income - -
------------- -------------
Total comprehensive loss for
the period (7,760,988) (19,173,616)
============= =============
Cents Cents
Loss per share for the period
- basic and
diluted 6 (5.97) (14.75)
------------- -------------
In arriving at the results for the financial period, all amounts
above relate to continuing operations.
There are no recognised gains or losses for the period other
than those disclosed above.
The notes on pages 16 to 34 form an integral part of these
financial statements.
NIMROD SEA ASSETS LIMITED (the "Company")
STATEMENT OF FINANCIAL POSITION
as at 30 September 2016
30 Sep 2016 31 Mar 2016
Notes USD USD
Non-current assets
Financial assets designated at
fair value
through profit and loss 7 11,902,142 18,510,222
Current assets
Receivables 8 50,105 69,954
Cash and cash equivalents 16,899,816 46,248,403
------------- -------------
16,949,921 46,318,357
Total assets 28,852,063 64,828,579
============= =============
Current liabilities
Payables - due within one year 9 2,718,687 4,934,215
------------- -------------
2,718,687 4,934,215
Total liabilities 2,718,687 4,934,215
============= =============
Total net assets 26,133,376 59,894,364
============= =============
Equity
Share capital 10 - -
Share premium 11 122,895,175 122,895,175
Revenue reserve (96,761,799) (63,000,811)
------------- -------------
26,133,376 59,894,364
============= =============
Cents Cents
Net asset value per share 20.10 46.07
------------- -------------
The financial statements were approved by the Board on 14
December 2016 and were signed on its behalf by:
Peter Atkinson
Director
The notes on pages 16 to 34 form an integral part of these
financial statements.
NIMROD SEA ASSETS LIMITED (the "Company")
STATEMENT OF CASH FLOWS
for the period ended 30 September 2016
Period Ended Period Ended
Notes 30 Sep 2016 30 Sep 2015
USD USD
Operating activities
Net loss for the period attributable
to
shareholders (7,760,988) (19,173,616)
Net movement in unrealised
losses on
financial
assets at fair value through
profit or loss 6,608,081 17,337,082
Interest received (18,685) (53,930)
(Decrease) / Increase in payables 384,472 704,078
Decrease / (Increase) in receivables 19,849 (8,285)
Foreign exchange movement 15,548 3,067
------------- -------------
Net cash flow used in operating
activities (751,723) (1,191,604)
------------- -------------
Investing activities
Purchase of investments 7 - (8,808,500)
Payment of uncalled share capital 7 - (344,000)
Interest received 18,685 53,930
------------- -------------
Net cash flow used in investing
activities 18,685 (9,098,570)
------------- -------------
Financing activities
Redemptions paid (26,000,000) (3,243,463)
Dividends paid (2,600,000) -
------------- -------------
Net cash flow used in financing
activities (28,600,000) (3,243,463)
------------- -------------
Cash and cash equivalents at
beginning of period 46,284,403 66,730,471
Decrease in cash and cash equivalents (29,333,039) (13,533,637)
Foreign exchange movement (15,548) (3,067)
------------- -------------
Cash and cash equivalents at
end of period 16,899,816 53,193,767
============= =============
The notes on pages 16 to 34 form an integral part of these
financial statements.
NIMROD SEA ASSETS LIMITED (the "Company")
STATEMENT OF CHANGES IN EQUITY
for the period ended 30 September 2016
Ordinary Shares
Share Revenue Total
Capital Reserve
USD USD USD
Balance as at 1 April
2016 122,895,175 (63,000,811) 59,894,364
Total comprehensive
loss for the - (7,760,988) (7,760,988)
period
Redemption - (26,000,000) (26,000,000)
------------ ------------- -------------
Balance as at 30 September 122,895,175 (96,761,799) 26,133,376
2016
------------ ------------- -------------
for the period ended 31 March 2016
Ordinary Shares
Share Revenue Total
Capital Reserve
USD USD USD
Balance as at 1 April 2015 122,895,175 (10,835,954) 112,059,221
Total comprehensive loss for
the year - (41,129,169) (41,129,169)
Dividends paid - (8,435,688) (8,435,688)
Dividend declared - (2,600,000) (2,600,000)
------------ ------------- -------------
Balance as at 31 March 2016 122,895,175 (63,000,811) 59,894,364
------------ ------------- -------------
The notes on pages 16 to 34 form an integral part of these
financial statements.
NIMROD SEA ASSETS LIMITED (the "Company")
NOTES TO THE FINANCIAL STATEMENTS
for the period ended 30 September 2016
1 GENERAL INFORMATION
The financial statements incorporate the results of Nimrod Sea
Assets Limited (the "Company").
The Company was incorporated in Guernsey on 8 October 2012 with
registered number 55718. Its share capital consists of one class of
Ordinary Shares "Shares") of no par value. The Shares were admitted
to trading on the Specialist Fund Segment ("SFS") of the London
Stock Exchange's Main Market ("LSE") on 24 March 2014.
The Company's investment objective was to obtain income returns
and a capital appreciation for its Shareholders by participating in
vehicles which acquire, charter and sell Marine Assets associated
with the offshore oil and gas industry.
2 ACCOUNTING POLICIES
The significant accounting policies adopted by the Company are
as follows:
(a) Basis of preparation
The financial statements have been prepared in conformity with
the International Accounting Standard 34 Interim Financial
Reporting as adopted by the European Union, and applicable Guernsey
law. The financial statements have been prepared on a historical
cost basis modified by the revaluation of investments at fair value
through profit and loss.
The same accounting policies and methods of computation are
followed in the interim financial report as compared with the most
recent annual financial statements (31 March 2016). This report
should be read in conjunction with the latest Annual Financial
Report (31 March 2016). For a detailed discussion about the group's
performance and financial position please refer to the Chairman's
Report on pages 4 and Executive Directors' Investment Report on
pages 5 to 8.
The Company is an investment entity and as such does not
consolidate the entities it controls. Instead interests in
subsidiaries are classified as fair value through profit and loss
and measured at fair value. Entities that meet the definition of an
investment entity within IFRS 10 are required to measure their
subsidiaries, other than those that provide investment services to
the Company, at fair value through profit or loss rather than
consolidate them. The criteria which define an investment entity
are, as follows:
-- An entity that obtains funds from one or more investors for
the purpose of providing those investors with investment
services;
-- An entity that commits to its investors that its business
purpose is to invest funds solely for returns from capital
appreciation, investment income or both; and
-- An entity that measures and evaluates the performance of
substantially all of its investments on a fair value basis.
The Company meets the criteria as follows:
The Company provides investment management services and has a
number of investors who pool their funds to gain access to these
services and investment opportunities that they might not have had
access to individually. The Company, being listed on the London
Stock Exchange, obtains funding from a diverse group of external
shareholders.
The Company's objective is consistent with that of an investment
entity. The Company has the intention to realise the constituents
of each of its investment classes.
The Company measures and evaluates the performance of
substantially all of its investments on a fair value basis. The
fair value method is used to represent the Company's performance in
its communication to the market, including investor presentations.
In addition, the Company reports fair value information internally
to Directors, who use fair value as a significant measurement
attribute to evaluate the performance of its investments and to
make investment decisions for mature investments.
Changes in accounting policies and disclosure
The following Standards or Interpretations have been adopted in
the current year. Their adoption has not had any impact on the
amounts reported in these Financial Statements.
IAS 1 Presentation of Financial Statements - amendments
resulting from the disclosure initiative effective for annual
periods beginning on or after 1 January 2016.
IFRS 7 Financial Instruments: Amendments resulting from
September 2014 Annual improvements to IFRSs, effective for annual
periods beginning on or after 1 January 2016.
IAS 34 Interim Financial Reporting - Amendments resulting from
September 2014 Annual Improvements to IFRSs, effective for annual
periods beginning on or after 1 January 2016.
IFRS 10 Consolidated Financial Statements - amendments regarding
the application of the consolidation exception effective for annual
periods beginning on or after 1 January 2016.
The following Standards or Interpretations that are expected to
affect the Company have been issued but not yet adopted by the
Company as shown below. Other Standards or Interpretations issued
by the IASB and IFRIC are not expected to affect the Company.
IFRS 7 Financial Instruments: Disclosures - Deferral of
mandatory effective date of IFRS 9 and amendments relating to
additional hedge accounting disclosure (and consequential
amendments). Applied only when IFRS 9 is adopted, which is
effective for annual periods beginning on or after 1 January
2018.
IFRS 9 Financial Instruments - classification and measurement of
financial assets effective for annual period beginning on or after
1 January 2018. The standard contains revised guidance including
new general hedge accounting requirements that align hedge
accounting more closely with an entity's risk management approach
and a new expected credit loss model for calculating impairment on
financial assets.
Other requirements of IFRS 9 relating to accounting for
liabilities and derecognition of financial instruments are
effective for annual periods beginning on or after 1 January
2018.
IFRS 15 Revenue from Contracts with Customers - effective for
annual periods beginning on or after 1 January 2018.
IAS 7 Statement of Cash Flows - amendments resulting from the
disclosure initiative effective for annual periods beginning on or
after 1 January 2017 (EU endorsement is outstanding).
The Directors have considered the above and are of the opinion
that these Standards and Interpretations are not expected to have
an impact on the Company's financial statements except for the
presentation of additional disclosures and changes to the
presentation of items of the financial statements. These items will
be applied in the first financial period for which they are
required.
(b) Taxation
The Company has been assessed for tax at the Guernsey standard
rate of 0%. Dividends receivable from investments held in Marine
Asset vehicles are recognised at an amount that excludes any
withholding taxes payable to the relevant tax authorities.
(c) Share capital
Shares are classified as equity. Incremental costs directly
attributable to the issue of Shares are recognised as a deduction
from equity.
(d) Expenses
All expenses are accounted for on an accruals basis.
(e) Interest income
Interest income is accounted for on an accruals basis.
(f) Cash and cash equivalents
Cash at bank and short term deposits which are held to maturity
are carried at cost. Cash and cash equivalents are defined as call
deposits, short term deposits with a term of no more than three
months from the start of the deposit and highly liquid investments
readily convertible to known amounts of cash and subject to
insignificant risk of changes in value. The Company invests its
cash and cash equivalents with Royal Bank of Scotland International
Limited and Diversified Enhanced Yield Account ("DEYA").
(g) Distributions
Distributions from investments are accounted for on an accruals
basis.
(h) Going concern
The Directors have a reasonable expectation that the Company has
adequate resources to continue in operational existence for the
foreseeable future and has significant liquid funds to do so.
Accordingly, the Directors have adopted the going concern basis in
preparing the financial statements.
(i) Segmental reporting
The Directors are of the opinion that the Company is engaged in
a single segment of business, being participating in vehicles that
acquire, charter and sell Marine Assets associated with the
offshore oil and gas industry.
(j) Foreign currencies
The financial statements of the Company are presented in the
currency of the primary economic environment in which it operates
(its functional currency). For the purpose of the financial
statements, the results and financial position of the Company are
expressed in US Dollars, which is the functional currency of the
Company, and the presentation currency for the financial
statements.
At each balance sheet date, monetary assets and liabilities that
are denominated in foreign currencies are retranslated at the rates
prevailing at that date. Non-monetary items carried at fair value
that are denominated in foreign currencies are translated at the
rates prevailing at the date when the fair value was determined.
Non-monetary items that are measured in terms of historical cost in
a foreign currency are not retranslated. Exchange differences are
recognised in profit or loss in the period in which they arise.
Transactions denominated in foreign currencies are translated into
USD at the rate of exchange ruling at the date of the
transaction.
(k) Financial instruments
Financial assets and financial liabilities are recognised in the
Company's balance sheet when the Company becomes a party to the
contractual provisions of the instrument. Financial assets and
financial liabilities are initially measured at fair value.
Transaction costs that are directly attributable to the acquisition
or issue of financial assets and financial liabilities (other than
financial assets and financial liabilities at fair value through
profit or loss) are added to or deducted from the fair value of the
financial assets or financial liabilities, as appropriate, on
initial recognition. Transaction costs directly attributable to the
acquisition of financial assets or financial liabilities at fair
value through profit or loss are recognised immediately in profit
or loss.
Financial assets
All financial assets are recognised and derecognised on a trade
date where the purchase or sale of a financial asset is under a
contract whose terms require delivery of the financial asset within
the timeframe established by the market concerned, and are
initially measured at fair value, plus transaction costs, except
for those financial assets classified as at fair value through
profit or loss, which are initially measured at fair value.
Financial assets are classified into the following specified
categories: financial assets 'at fair value through profit or loss'
("FVTPL") and 'loans and receivables'. The classification depends
on the nature and purpose of the financial assets and is determined
at the time of initial recognition.
Financial assets at fair value through profit and loss
("FVTPL")
Financial assets are classified as at FVTPL when the financial
asset is either held for trading or it is designated as at
FVTPL.
Financial assets at FVTPL are stated at fair value, with any
gains or losses arising on re-measurement recognised in profit or
loss. Fair value is determined in the manner described in Note
7.
The Company's investments in Marine Asset vehicles have been
designated as at FVTPL on the basis that they are managed and their
performance is evaluated on a fair value basis, in accordance with
the Company's documented investment strategy, and information about
the investments is provided internally on that basis.
Loans and receivables
Trade receivables, loans, and other receivables that have fixed
or determinable payments that are not quoted in an active market
are classified as 'loans and receivables'. Loans and receivables
are measured at amortised cost using the effective interest method,
less any impairment. Interest income is recognised by applying the
effective interest rate, except for short-term receivables when the
recognition of interest would be immaterial.
Derecognition of financial assets
The Company derecognises a financial asset only when the
contractual rights to the cash flows from the asset expire, or when
it transfers the financial asset and substantially all the risks
and rewards of ownership of the asset to another entity. If the
Company neither transfers nor retains substantially all the risks
and rewards of ownership and continues to control the transferred
asset, the Company recognises its retained interest in the asset
and an associated liability for amounts it may have to pay.
On derecognition of a financial asset in its entirety, the
difference between the asset's carrying amount and the sum of the
consideration received and receivable and the cumulative gain or
loss that had been recognised and accumulated in equity is
recognised in profit or loss.
Financial liabilities and equity
Debt and equity instruments are classified as either financial
liabilities or as equity in accordance with the substance of the
contractual arrangement.
Equity instruments
An equity instrument is any contract that evidences a residual
interest in the assets of an entity after deducting all of its
liabilities. Equity instruments issued by the Company are
recognised at the proceeds received, net of direct issue costs.
Repurchase of the Company's own equity instruments is recognised
and deducted directly in equity. No gain or loss is recognised in
profit or loss on the purchase, sale, issue or cancellation of the
Company's own equity instruments.
Financial liabilities
Financial liabilities, including borrowings, are initially
measured at fair value, net of transaction costs.
Financial liabilities are subsequently measured at amortised
cost using the effective interest method, with interest expense
recognised on an effective yield basis.
Derecognition of financial liabilities
The Company derecognises financial liabilities when, and only
when, the Company's obligations are discharged, cancelled or they
expire.
3 SIGNIFICANT JUDGEMENTS AND ESTIMATES
In the application of the Company's accounting policies, which
are described in Note 2, the Directors are required to make
judgements, estimates and assumptions about the carrying amounts of
assets and liabilities that are not readily apparent from other
sources. The estimates and associated assumptions are based on
historical experience and other factors that are considered to be
relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision affects
only that period, or in the period of the revision and future
periods if the revision affects both current and future
periods.
The following are the critical judgements and estimates that the
Directors have made in the process of applying the Company's
accounting policies and that have the most significant effect on
the amounts recognised in financial statements.
Fair value measurement
The Company's financial assets are measured at fair value for
financial reporting purposes. In estimating the fair value of an
asset the Board have approved a discounted cash flow methodology
for assets with long term charter and the adjusted asset valuation
methodology for assets with short term or no charter using inputs
from the Marine Asset Companies underlying the investments and
market wide data e.g. depreciation rates. Independent valuations
were obtained and these were used to benchmark the valuations
prepared by Auld Partners Ltd and any significant differences are
investigated. The Board resolved to use the valuation values
provided by Auld Partners Ltd. The valuation techniques and inputs
to the fair value models are reviewed bi-annually by the directors
to ensure the assumptions are still appropriate. Detailed
information about the valuation techniques and inputs used in
determining the fair value of the financial assets is disclosed in
Note 7.
4 OPERATING EXPENSES
Period Ended Period Ended
30 Sep 2016 30 Sep 2015
USD USD
Corporate and Shareholder advisory
fee 96,499 154,756
Consultancy Services fee 569,439 555,550
Administration fees 39,250 43,707
Investment acquisition costs - 24,000
Bank interest and charges 957 1,556
Accountancy fees 18,667 16,000
Registrar's fee 5,079 7,370
Audit fee 32,548 44,504
Directors' remuneration 129,308 139,788
Directors' and officers' insurance 21,559 21,499
**DSV Alliance expenses - 1,784,104
*Legal and professional expenses 724,502 165,927
Other operating expenses 25,636 32,110
------------- -------------
1,663,444 2,990,871
============= =============
*Included in legal and professional expenses are non-audit
services provided by Deloitte LLP in the sum of USD 28,500 (30
September 2015 : USD 30,676).
**DSV Alliance expenses related to the cost of the Company's
provision financial support for the maintenance of the relevant
vessel whilst it sought to realise its investment. The support was
withdrawn in February 2016 and DSV Alliance AS was voted into
liquidation.
5 DIRECTORS' REMUNERATION
Under their terms of appointment, the two previous executive
directors were each paid a fee of USD 75,000 per annum by the
Company. With the new arrangement with Auld Partners Ltd, the
current executive directors are each paid a fee of USD 54,000 per
annum. The three remaining Directors are each paid a each fee of
GBP 25,000, with the exception of the Chairman, who receives GBP
30,000 per annum, and the Chairman of the Audit Committee, who also
receives an additional GBP 4,000 per annum.
6 LOSS PER SHARE
Loss per Share is calculated by dividing the net loss for the
year attributable to shareholders of USD 7,760,989 (30 September
2015: USD 19,173,616) by the weighted average number of Shares in
issue during the period since the placing in March 2014 of
130,000,000 Shares (30 September 2015: 130,000,000 ).
7 FINANCIAL ASSETS DESIGNATED AT FAIR VALUE THROUGH PROFIT AND LOSS
The Company holds interests in Marine Asset Companies that enter
into medium to long term contractual relationships with
counterparties that charter the Marine Asset held by the Marine
Asset Company. The investments in Marine Asset Companies are stated
at fair value. Any changes to their fair value are recognised
through the profit or loss.
Percentage
of
Percentage Investable Percentage Fair value Fair value
of of
ownership Funds 30 Investable as at 30 as at 31
Sep Mar
September Funds 31 2016 2016
2016 March 2016
% % % USD USD
*Bukit Timah Offshore
DIS 26.0 0.0 4.8 - 5,796,425
Norseman Offshore
IS 43.0 0.0 0 - -
Volstad Marine
DIS II 20.5 2.8 3 3,197,061 3,670,899
Altus Subsea IS 51.0 3.4 5.2 4,075,249 6,321,625
**DSV Alliance
DIS 99.5 0.0 0 - -
Aberdeen Offshore
DIS 75.0 0.0 0 - -
Jane Offshore Ltd 50.0 3.8 2.3 4,629,832 2,721,273
----------- -----------
11,902,142 18,510,222
=========== ===========
All Marine Asset Companies are incorporated in Norway and
operations are worldwide.
All Marine Asset Companies' principal activities are associated
with offshore oil and gas industry and deep sea exploration.
*Bukit Timah Offshore DIS is held through an intermediate
holding company Nimrod Sea AS which is 100% owned by the Company
and incorporated in Norway.
**DSV Alliance AS was written down to nil and the investee is in
liquidation.
The valuations stated above are based on the latest information
available to the Board as at 14 December 2016, being the latest
practicable date prior to publication of these financial
statements.
In arriving at the above fair values, the Board considered the
following:
Bukit Timah Offshore DIS
As reported by the Company on 28 July 2016, a winding-up
application was filed in Singapore in respect of Swiber Holdings
Limited on 27 July 2016, which subsequently changed to the company
being put into judicial management. Swiber is no longer performing
under the charters, which have been terminated. The Board is
co-operating with the financing banks, who intend to take control
of the vessels and auction them. The estimated values that can be
achieved from a forced sale of the vessels are unlikely to cover
the outstanding debt, so there is no equity value remaining.
Jane Offshore Limited
In common with the overall OSV fleet, the EDT Jane has had poor
but improving utilisation rates. However, EDT Offshore Ltd ("EDT")
continues to make payment in full under the charter. Jane Offshore
Ltd is not in compliance with all its loan covenants, but the
lender has provided a waiver until year-end 2016 and discussions
are taking place regarding an extension. EDT has successfully taken
steps to restructure its obligations and raise cash through asset
sales, as well as actively winning new contracts. Distributions
payable by Jane Offshore Limited have been suspended. The Company
is of the opinion that distributions may resume in 2018 and this
has been reflected in the valuation.
Volstad Maritime DIS II
The seismic market continues to be extremely weak, but the
charterer of this investment continues to perform as planned. The
Oceanic Endeavour remains on charter to CGG Eidesvik and has worked
consistently throughout the year. CGG, the parent company of the
charterer, is one of the larger players in the segment and is
proactively restructuring its business to cope with the difficult
market. However, CGG is rated CCC+. The vessel's value has recently
been revised downwards, but the company remains in compliance with
the minimum loan to value covenant on its debt. The vessel is one
of the most capable in its class with up to date technology
installed and we believe it is highly regarded by the charterer.
However, given the current market conditions we believe it is
unlikely the charter extension options will be exercised at the
agreed rates and it is likely that a different arrangement will
need to be negotiated with CGG. We understand that, in light of
this uncertainty, the lender to this project will not permit the
payment of dividends in the short to medium term.
Altus Subsea IS
This project has encountered significant payment issues, largely
because Marine Engineering and Diving Services FZE ("MEDS"), the
charterer, has had insufficient work for the Altus Invictus. Since
the contract in April 2016 in Qatar, Altus Invictus has been
unemployed apart from a few weeks recently when the vessel has been
on a contract in Iran. MEDS remains in financial difficulties with
an uncertain forward order book for its fleet of 3 vessels. The
Board is currently working with the business manager in order to
assess the Company's options.
The valuation assumes sale of the vessel after a period of
lay-up with the vessel value based on recent broker valuations.
Norseman Offshore IS
Viking Supply AS (charterer of the Odin Viking) stopped paying
charter hire in February 2016 and negotiations between the parties
since then have not been successful. DVB as lender to Norseman AS
has made calls for the uncalled capital to be paid in, something
the majority of the shareholders have resisted. As a result, DVB
have successfully petitioned the Norwegian courts for the
bankruptcy of Norseman AS. DVB has also won the court's approval of
a forced sale of the vessel and other rights such as payment of the
uncalled capital. The Board is currently evaluating its options
with respect to the uncalled capital (the Company's share is USD
1,978,000). In addition, debt exceeds the current asset value of
the vessel. The investment has therefore been valued at nil.
DSV Alliance AS
DSV Alliance has been written off entirely and DSV Alliance AS
is in liquidation.
Aberdeen Offshore DIS
The FS Cygnus is currently on charter to Enquest UK Ltd until
January, 2017 at a rate which covers operating expenses, but which
is insufficient to fully cover debt service. Fletcher is currently
in negotiations for an extension of the charter, but at a lower
rate. Aberdeen Offshore AS has reached agreement with the senior
debt provider to delay debt service until January 2017. Given the
cashflow situation, the defaults under the loan (temporarily waived
by the lender) and the high debt level versus the estimated market
value of the vessel, the equity should be considered lost and it
may not be possible to safeguard any possible future recovery for
the Company.
IFRS 13 requires disclosure of fair value of measurements of
financial assets and liabilities, using a three-level hierarchy as
detailed below:
-- Level 1: Quoted prices (unadjusted) in active market for identical assets or liabilities,
-- Level 2: Inputs other than quoted prices included within
Level 1 that are observable for the assets or liability, either
directly (that is, as prices) or indirectly (that is, derived from
prices),
-- Level 3: Inputs for the assets or liability that are not
based on observable market data (that is unobservable inputs).
Under IFRS 13, all of the investments have been classified as
Level 3 under the fair value hierarchy as their valuations are
derived from techniques that include inputs that are not based on
observable market data.
There have been no transfers between levels during the period.
The level 3 reconciliation is provided below:
Level 3 reconciliation
30 Sep 2016 31 Mar 2016
USD USD
Balance at beginning of period 18,510,222 45,591,678
Additions - purchase of investments - 8,808,500
Additions - payment of uncalled
share - 344,000
capital
Additions - Uncalled Capital
now due - 1,978,000
Disposal - DSV Alliance - (10,061,689)
Movement in unrealised depreciation
on (6,608,001) (28,150,267)
investments
------------- ---------------
Balance at end of year 11,902,141 18,510,222
============= =============
Closing Marine Assets cost 57,304,125 57,304,125
------------- -------------
Unrealised depreciation on
valuation carried (45,401,984) (38,793,903)
forward
============= =============
Valuation process for Level 3 valuations
The valuation of the investments as at 30 September 2016 has
been derived using the Discounted Cash Flow (DCF) method for assets
with a long term charter and Adjusted Valuation for assets with a
short term or no charter.
Marine Assets 1
Under the DCF method the fair value of investments is estimated
using assumptions regarding the forecast distributions from the
underlying partnerships and the residual value of the return of
capital at the end of the project. The present value of the
projected cash flows from the distributions and residual value at
the end of the project is derived using a discount rate that is
considered to be appropriate. The discount rate is based on market
conditions, investment performance and other relevant information.
The discount rate is reviewed bi-annually. Page 26 sets out the
range of rates and sensitivity analysis.
Marine Assets 2
Under the Adjusted Asset Valuation method the fair value of
investments is based on the latest available independent valuation
of the vessel held by the Marine Asset Company, carried out by an
independent valuer on a "willing seller and willing buyer" basis.
The independent valuation has then been adjusted for the available
cash in the Marine Asset Company, repayment of the mortgage and
associated interest, subject to any agreements relating to the
allocation of the proceeds on sale of the vessel between the
Company and the mortgage provider, ongoing operating expenses to
reflect the estimated sale date or long term charter and prevailing
market conditions.
The valuations are the responsibility of the Board of Directors
of the Company. The valuation method and its inputs were considered
and approved by the Board. On a bi-annual basis the valuation
results and underlying assumptions will be reviewed to ensure that
they remain appropriate.
Information about fair value measurement using significant
unobservable inputs (Level 3)
Significant
Fair Value Fair Value Valuation unobservable Range* (weighted average)
at at
Asset class 31 Mar 2016 30 Sep 2016 technique Input
USD USD
--------------- ------------ ------------ ---------- ------------- --------------------------
Marine Assets Discount
1 12,188,597 7,826,892 DCF Rate 21.9% - 27.6% (24.75%)
Residual
value
of vessels USD 4,790,882 - USD
net of 5,815,358
loans in (USD 5,303,120)
SPV
--------------- ------------ ------------ ---------- ------------- --------------------------
Marine Assets
2
Aberdeen - - Adjusted Charter free N/A
Offshore valuation Valuation
DIS
Norseman - - Adjusted Charter free N/A
Offshore valuation Valuation
IS
Altus Subsea
IS 6,321,625 4,075,249 Adjusted Charter free N/A
valuation Valuation
Estimated N/A
operating
costs
Sensitivity analysis to significant changes in unobservable
inputs
The significant unobservable inputs used in the fair value
measurements categorised within Level 3 of the fair value hierarchy
together with a quantitative sensitivity analysis as at 30
September 2016 are shown below:
Favourable Unfavourable
Significant Sensitivity Change in Change in
fair fair
Asset class unobservable used* value value
input
USD USD
--------------- ----------------- ------------ ----------- -------------
Marine Assets
1 Discount Rate 5% 1,315,082 (1,008,971)
Residual value
of assets 20% 650,492 (650,492)
Marine Assets
2
Altus Subsea Charter free
IS valuation 20% 824,222 (824,222)
Estimated Costs 20% 130,703 (130,703)
* The sensitivity analysis refers to a percentage amount added
or deducted from the input and the effect this has on the fair
value. An increase in discount rate will result in a decrease in
fair value and vice versa. An increase in residual value will
result in an increase in fair value and vice versa. When performing
sensitivity analysis on discount rates, the rates have been
increased or decreased by five whole percentage points. In the
event of uncertainty around charter restructuring and the potential
impact on the timing of dividend payments a discount of up to 50%
may be applied to the valuation.
In carrying out the sensitivity analysis it was assumed that all
other variables remained constant. The sensitivity rates used
represent the Board's assessment of what changes may feasibly occur
to the residual value of the vessels and also the possible changes
in the market and risk profile of the investments.
There has been significant disruption in the Company's principal
markets where the continued depressed oil price has resulted in
failure and stress amongst the charter holders to whom the
underlying vessels are leased. This disruption has also led to
significant illiquidity and uncertain pricing both for the
underlying vessels and Company's investments. These reasons give
rise to material uncertainty in valuation.
8 RECEIVABLES
30 Sep 2016 31 Mar 2016
USD USD
Prepayments 22,956 43,573
Sundry debtors 27,149 26,381
------------ ------------
50,105 69,954
============ ============
9 PAYABLES (amounts falling due within one year)
30 Sep 2016 31 Mar 2016
USD USD
Accrued administration fees 9,227 8,116
Accrued audit fee 32,430 79,423
Accrued shareholder advisor fee 17,188 79,313
Accrued management fee 94,906 94,906
Accrued legal & professional fees 559,072 75,000
Accrued printing expenses - 1,648
Other accrued expenses 27,864 17,809
* Capital Commitment 1,978,000 1,978,000
** Dividend Payable - 2,600,000
------------ ------------
2,718,687 4,934,215
============ ============
* Payable raised for Norseman uncalled capital that will become
due. This has been accrued for as the Company does not believe it
will recover this additional investment. Refer to note 7 and the
Executive Directors Investment report for more information.
** A dividend of USD 2,600,000 was declared on 29 March
2016.
The above carrying value of payables is equivalent to the fair
value.
10 SHARE CAPITAL
The authorised share capital of the Company is an unlimited
number of shares of no par value which may be issued as Ordinary
Shares or reclassified as any other class of shares.
30 Sep 2016 31 Mar 2016
Shares Shares
Issued share capital 130,000,000 130,000,000
------------ ------------
130,000,000 130,000,000
============ ============
Shareholders holding Shares are entitled to receive and
participate in any dividends out of income attributable to the
Shares, other distributions of the Company available for such
purposes and resolved to be distributed in respect of any
accounting period or other income or right to participate
therein.
On a winding up, shareholders are entitled to the surplus assets
attributable to the Shares remaining after payment of all the
creditors of the Company. Shareholders have the right to receive
notice of and to attend, speak and vote at general meetings of the
Company.
Shareholders shall have the right to receive notice of and to
attend, speak and vote at general meetings of the Company and each
holder of Shares being present in person or by attorney at a
meeting shall upon a show of hands have one vote and upon a poll
each such holder present in person or by proxy or by attorney shall
have one vote in respect of each Share held by him/her.
Provisions in the Company's Articles of Incorporation enable the
Directors to repay their invested capital to shareholders via the
issue and redemption of B Shares. Each time the Board wishes to
return capital to shareholders, the Company is able to issue B
Shares to all registered shareholders, pro rata to their existing
holdings of Redeemable Ordinary Shares. Any such B Shares may be
issued fully paid, then redeemed at the option of the Directors for
the amount deemed paid up, with the capital cash proceeds paid to
holders of such B Shares as soon as reasonably practicable
thereafter.
At a Board meeting held on 12 April, 2016 and as announced on 13
April, 2016 (RNS number 1977V), the Board resolved to return to
shareholders 20 US$ cents per Redeemable Ordinary Share (US$26
million in aggregate) by way of an issue of 130 million B Shares to
shareholders on the Company's register on the record date of 22
April, 2016. Each shareholder was issued one B Share for every
Redeemable Ordinary Share held by them and the B Shares were all
redeemed on 21 April, 2016 at a value of US$ 20 cents per B share,
with the redemption proceeds being paid to shareholders on 29
April, 2016.
The cash proceeds payable on the redemption of the B Shares
represented a capital distribution of 20 US$ cents per share and
the aggregate redemption proceeds were US$26 million. No further B
Shares were issued in the period under review nor up to the date of
this half-yearly financial report.
11 SHARE PREMIUM
30 Sep 2016 31 Mar 2016
Shares Shares
Issued share premium 122,895,175 122,895,175
Share issue costs - -
------------ ------------
122,895,175 122,895,175
------------ ------------
12 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Company's objective is to obtain income returns and a
capital return for its shareholders by participating in vehicles
which acquire, charter and sell Marine Assets associated with the
offshore oil and gas industry. Risk is inherent in the Company's
activities, but is managed through a regular process of
identification, measurement and monitoring by the Board of
directors. The financial risks which the Company are exposed to
include: market risk, interest rate risk, credit risk (including
counterparty risk), liquidity risk and capital management risk. The
Board regularly review and agrees policies for managing each of
these risks and these are summarised below and overleaf:
(a) Market Risk
Market risk is the risk that the future cash flows or fair value
of the investments will fluctuate due to general economic and
market conditions, such as currencies, interest rates, availability
of credit, inflation rates, economic uncertainty, changes in laws,
trade barriers, currency exchange controls and national and
international political circumstances. All of these may affect the
price level, volatility and liquidity of securities prices and
result in losses in the value of the Company's assets.
The Company invests in Marine Asset Companies holding highly
specialised Marine Assets for use within the offshore oil and gas
industry and which have few alternative uses. The Company's
performance will therefore depend largely on the overall condition
of the offshore oil and gas industry.
The effects of the changing market place are considered in
deriving an appropriate discount rate for determining the fair
value of the assets. The sensitivity on the fair value of the
Company's investment portfolio as a result of a 5% increase/
decrease in discount rates is shown in Note 7.
The residual value of a vessel at the end of a charter term may
also be impacted if there is not an active market due to market
conditions prevailing at the time. The residual value of the
vessels is monitored through independent valuations and broker
reports. The sensitivity on the fair value of the Company's
investment portfolio as a result of a 20% increase/ decrease in
residual value is shown in Note 7.
(b) Credit risk
Credit risk is the risk that an issuer or counterparty will be
unable or unwilling to meet a commitment that it has entered into
with the Company.
The Company is exposed to credit risk in respect of its cash and
cash equivalents, arising from possible default of the relevant
counterparty, with a maximum exposure equal to the carrying value
of those assets.
The credit risk on liquid funds is limited as the counterparties
are banks with high credit ratings assigned by international
credit-rating agencies. The Company monitors the placement of cash
balances on an ongoing basis. The Company invests its cash and cash
equivalents with Royal Bank of Scotland International Limited and
Diversified Enhanced Yield Account ("DEYA") facility which at 30
September 2016 deposited cash in Royal Bank of Scotland
International, ABN Amro, Lloyds, BNP and Santander. DEYA facility
is maintained by JTC Cash Management service where the Company's
"on call" cash is amalgamated with other participating parties in
order to diversify and thus reduce the level of depositor risk and
enhance yield. The credit risk is mitigated through the spread of
the Company's cash across various counterparties each with a
Standard and Poor's ratings ranging between BBB+ to A+ at 14
December 2016.
The Company is exposed to credit risk in respect of its
financial assets designated at fair value, arising from possible
default of the counterparties that will charter the marine asset
from the Marine Asset vehicles in which the Company holds an
interest. There is no guarantee that all of the counterparties will
honour their contractual obligations and default may adversely
effect the dividends received if they do not meet their financial
obligations and the residual value if the vessel is poorly
maintained by the counterparty.
The Marine Assets companies into which the Company invests
frequently utilise a substantial amount of leverage to finance the
purchase of the marine assets. These Marine Assets companies will
therefore likely be required to comply with loan covenants and
undertakings. There is therefore a credit risk to the Company that
the underlying Marine Asset company holding one or more investments
may fail to comply with any covenants and the relevant lenders will
recall the loans. In such circumstances the Marine Asset company
may be required to sell the asset to repay the outstanding loan. If
the asset is sold, in relation to that Marine Asset the Company
will receive only the proceeds left after the deduction of the
outstanding loan repayments.
The Board receives quarterly reports and regular market updates
from the executive directors. The Board continues to monitor the
financial stability of each of its investments and this is
considered when establishing the appropriate valuation method. If
the income receivable from a counterparty ceases, or the Board
concludes that the income will not be paid in the longer term, the
Board will refer to broker reports and valuations and comparable
sales (if any) to ascertain the value of the underlying Marine
Asset.
The overall credit exposure on a DCF basis is $7,826,892 (31
March 2016 : $12,188,597). If any of the charterers had a credit
event which meant they were no longer able to adhere to the charter
contract with the SPV, the value recovered may be on an asset sale
basis, which was not practical to quantify at the end of the
reporting period. The value receivable on an asset sale basis would
be expected to be significantly lower, as evidenced by the asset
sale valuations of the Altus Invictus (see Note 7 for further
details).
Sellers' credits have been entered into for some of the
investments as a way of mitigating the risk of default by the
charterer. The sellers' credit acts as a performance related
obligation which, subject to the charterer performing all of its
obligations, becomes repayable at the end of the charter. In the
event of default by the charterer of its obligations the seller's
credit would not be paid.
In Jane Offshore Ltd, there is a seller's credit for USD23.98
million (Company's share - USD11.99 million), but will be reduced
by USD7.7 million at the end of the 10 year charter period,
reducing the Company's share at this point to USD8.14 million.
All charter arrangements allow the charterer to conduct
worldwide operations. The Board does not consider that credit risk
is concentrated in one geographic location.
The Investment Committee considered the counterparty risk prior
to making an investment decision. The Board does not quantify the
counterparty risk for all the investments on an ongoing basis due
to the limited information available on a number of the charterers.
The executive directors obtain regular updates from the appointed
commercial manager on whether the charterer and debt is in
compliance and reports to the Board should issues arise.
Further information is given in Note 7 on pages 22 to 27.
(c) Interest rate risk
Interest rate risk arises from the possibility that changes in
interest rates will affect future cash flows, it is also the risk
that fluctuations in market interest rates will result in a
reduction in deposit interest earned on bank deposits held by the
Company.
Other than cash and cash equivalents, none of the assets or
liabilities of the Company attract or incur interest. The following
table details the Company's exposure to interest rate risks:
As at 30 September 2016:
Non-interest Total
0-3 3-6 Bearing
Months months
USD USD USD USD
Financial assets
Assets held
at fair
value
through profit
and - - 11,902,142 11,902,142
loss
Receivables - - 50,105 50,105
Cash and cash 16,899,816 - - 16,899,816
equivalents
Total financial 16,899,816 - 11,952,247 28,852,063
assets
----------- ------- ------------- -----------
Financial liabilities
Accrued expenses - - 2,718,687 2,718,687
------------ --- ---------- ----------
Total financial liabilities - - 2,718,687 2,718,687
------------ --- ---------- ----------
Total interest bearing 16,899,816 -
assets
------------ ---
As at 31 March 2016:
Non-interest Total
0-3 months 3-6 months Bearing
USD USD USD USD
Financial assets
Assets held at fair
value
through profit and
loss - - 18,510,222 18,510,222
Receivables - - 69,954 69,954
Cash and cash equivalents 46,248,403 - - 46,248,403
----------- ----------- ------------- -----------
Total financial assets 46,248,403 - 18,580,176 64,828,579
----------- ----------- ------------- -----------
Financial liabilities
Accrued expenses - - 2,334,215 2,334,215
Dividend Payable - - 2,600,000 2,600,000
------------ --- ---------- ----------
Total financial liabilities - - 4,934,215 4,934,215
------------ --- ---------- ----------
Total interest bearing 46,248,403 -
assets
------------ ---
If interest rates had been 25 basis points higher throughout the
period and all other variables were held constant, the Company's
net assets attributable to shareholders as at 30 September 2016
would have been USD 42,250 (31 March 2016: USD 115,621) greater due
to an increase in the amount of interest receivable on the bank
balances.
If interest rates had been 25 basis points lower throughout the
period and all other variables were held constant, the Company's
net assets attributable to shareholders as at 30 September 2016
would have been USD 42,250 (31 March 2016: USD 115,621) lower due
to a decrease in the amount of interest receivable on the bank
balances.
(d) Liquidity risk
Liquidity risk is the risk that the Company will encounter
difficulty in realising assets or otherwise raising funds to meet
financial commitments. The Company's main financial commitment is
its ongoing operating expenses.
The Board regularly monitors the cash flow of the Company to
ensure that the Company has sufficient liquid resources available
to fulfil its operational plans and to meet its financial
obligations as they fall due.
The table below details the residual contractual maturities of
financial liabilities:
As at 30 September 2016:
Less than 1 to 3 months Greater
3 to than
1 month Months 1 year 1 year Total
USD USD USD USD USD
Accrued
expenses 671,166 2,047,521 - - 2,718,687
---------- ---------- --------- -------- ----------
671,166 2,047,521 - - 2,718,687
========== ========== ========= ======== ==========
As at 31 March 2016:
Less than 1 to 3 months Greater
3 to than
1 month Months 1 year 1 year Total
USD USD USD USD USD
Accrued
expenses 176,766 2,157,449 - - 2,334,215
Dividend
payable 2,600,000 - - - 2,600,000
---------- ---------- --------- -------- ----------
2,776,766 2,157,449 - - 4,934,215
========== ========== ========= ======== ==========
(e) Capital management
The Company manages its capital to ensure that the Company will
be able to continue as a going concern while maximising the return
to shareholders.
The capital structure of the Company consists of cash and cash
equivalents and equity attributable to equity holders, comprising
issued capital and retained earnings and losses.
The Board reviews the capital structure on a bi-annual
basis.
Equity includes all capital and reserves of the Company that are
managed as capital.
13 ULTIMATE CONTROLLING PARTY
In the opinion of the Board, the Company has no ultimate
controlling party.
14 COMMITMENTS AND CONTINGENT LIABILITIES
There are uncalled capital commitments in place in respect of
certain Marine Asset Companies. It is unknown if the commitment
will be called upon, as this is dependent on several conditions and
circumstances. The uncalled capital commitments are summarised as
follows:
30 Sep 2016 31 March 2016
Volstad Marine DIS II NOK 6,150,000 6,150,000
Jane Offshore Ltd USD 5,000,000 5,000,000
* Norseman Offshore IS USD 1,978,000 1,978,000
* Accrued for see Note 9. The amount has been accrued for as the
Company does not believe it will recover this additional
investment.
15 RELATED PARTY TRANSACTIONS
Nimrod Capital LLP ("Nimrod") is the Company's Corporate and
Shareholder Adviser. In consideration for Nimrod acting as placing
agent in the initial Ordinary Share Placing, the Company agreed to
pay to Nimrod at Admission a placing commission equal to 2.5 per
cent of the initial gross proceeds of the initial Ordinary Share
Placing. The amount was deducted from Share premium.
The Company previously paid Nimrod for its services as Corporate
and Shareholder Adviser a fee of USD 301,964 per annum (adjusted
annually for inflation from 2015 onwards, at 2.5 per cent per
annum) payable quarterly in arrears. With effect from 1 April 2016,
this fee was reduced to USD 193,000 per annum.
During the period, the Company incurred USD 96,499 (30 September
2015: USD 154,756) of fees due to Nimrod, of which USD 17,188 (31
March 2016: USD 79,313) was outstanding to this related party as at
30 September, 2016.
Stamford Maritime Limited ("Stamford") was the Company's
Consultancy Service Provider. The Company was to pay to Stamford in
consideration for the services of the Executive Directors, together
with certain investment support services to the Directors and the
Company, a fee of USD1,083,999 per annum (adjusted annually for
inflation from 2015 onwards, at 2.5 per cent per annum) payable
monthly in arrears. However, the agreement with Stamford was
terminated and the Executive Directors from Stamford resigned with
effect from 30 September, 2016.
During the Period, the Company incurred USD 569,439 (30
September 2015: USD 555,550) of fees due to Stamford, of which USD
94,906 (31 March, 2016: USD 94,906) was outstanding to this related
party as at 30 September, 2016.
A new agreement was entered into with Auld Partners Ltd ("Auld")
as the Company's Consultancy Service Provider. The current
executive directors of the Company are also directors of Auld. The
Company is to pay to Auld in consideration for the services of the
current executive directors, together with certain investment
support services to the Directors and the Company, a fee of USD
23,500 per month, payable monthly in arrears.
Directors' fees are disclosed in Note 5.
16 EVENTS AFTER STATEMENT OF FINANCIAL POSITION DATE
There were no events that occurred between the Period end and
the date of signing of these financial statements which required
disclosure within the financial statements or these notes.
NIMROD SEA ASSETS LIMITED (the "Company")
KEY ADVISERS AND CONTACT INFORMATION
Exchange Specialist Fund Segment of the
London Stock
Exchange's Main Market
----------------------------------- ------------------------------------
Ticker NSA
----------------------------------- ------------------------------------
Listing Date 24 March 2014
----------------------------------- ------------------------------------
Financial Year end 31 March
----------------------------------- ------------------------------------
Base Currency USD
----------------------------------- ------------------------------------
ISIN GG00BK0SC854
----------------------------------- ------------------------------------
SEDOL BK0SC85
----------------------------------- ------------------------------------
Country of Incorporation Guernsey - Registration number
55718
----------------------------------- ------------------------------------
Registration Number 55718
----------------------------------- ------------------------------------
Registered Office Auditor
----------------------------------- ------------------------------------
Ground Floor Deloitte LLP
----------------------------------- ------------------------------------
Dorey Court PO Box 137, Regency Court
----------------------------------- ------------------------------------
Admiral Park Glategny Esplanade
----------------------------------- ------------------------------------
St Peter Port St Peter Port
----------------------------------- ------------------------------------
Guernsey GY1 2HT Guernsey GY1 3HW
----------------------------------- ------------------------------------
Corporate and Shareholder Adviser Administrator and Company Secretary
----------------------------------- ------------------------------------
Nimrod Capital LLP JTC (Guernsey) Limited
----------------------------------- ------------------------------------
St Helen's Place Ground Floor, Dorey Court
----------------------------------- ------------------------------------
London Admiral Park
----------------------------------- ------------------------------------
EC3A 6AB St Peter Port
----------------------------------- ------------------------------------
Guernsey GY1 2HT
----------------------------------- ------------------------------------
Consultancy Service Provider Registrar
----------------------------------- ------------------------------------
Stamford Maritime Anson Registrars Limited
----------------------------------- ------------------------------------
Southgate Chambers PO Box 426, Anson House
----------------------------------- ------------------------------------
37/39 Southgate Street Havilland Street
----------------------------------- ------------------------------------
Winchester St Peter Port
----------------------------------- ------------------------------------
Hampshire SO23 9EH Guernsey GY1 2QE
----------------------------------- ------------------------------------
(resigned 30 September 2016) UK Transfer Agent
----------------------------------- ------------------------------------
Anson Registrars (UK) Limited
----------------------------------- ------------------------------------
Auld Partners Ltd 3500 Parkway
----------------------------------- ------------------------------------
26-27 Bedford Square Whiteley
----------------------------------- ------------------------------------
London Fareham
----------------------------------- ------------------------------------
WC1B 3HP Hampshire PO15 7AL
----------------------------------- ------------------------------------
(appointed 3 October 2016) Solicitors to the Company (as
to
----------------------------------- ------------------------------------
English law)
----------------------------------- ------------------------------------
Advocates to the Company (as Herbert Smith Freehills LLP
to
----------------------------------- ------------------------------------
Guernsey law) Exchange House
----------------------------------- ------------------------------------
Carey Olsen Primrose Street
----------------------------------- ------------------------------------
PO Box 98 London
----------------------------------- ------------------------------------
Carey House EC2A 2EG
----------------------------------- ------------------------------------
Les Banques
----------------------------------- ------------------------------------
St Peter Port
----------------------------------- ------------------------------------
Guernsey GY1 4BZ
----------------------------------- ------------------------------------
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR FMMMZNDNGVZM
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December 14, 2016 12:47 ET (17:47 GMT)
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